IMM : Business Management Page 1 of Tami Lee Cox Student Number : C77716________________________________________________ Question 1: 1.

1 In the political Environment managers decisions are continually affected by the course of the countrys politics, especially the intense pressure put on by the ruling government. Things like sanctions, war, terrorism and instability can have a crippling effect on our economy. These stemming from political issues e.g.: Political instability is caused when an election for presidential candidates. Therefore management needs to monitor the political environment during and after the election period to ensure the business environment does not suffer. 1.2 Technological Environment this refers to the knowledge of how to do something whether its age old or the latest. Technology is primarily responsible for the change we see in the environment. It is involved in almost every process in a business from manufacturing to management to marketing. Therefore a change in the technological environment will effect the business environment and have strategic implications. It can also present challenges to an organization due to rapid innovation that takes place. Management needs to make technological changes to keep up with the advancing technology in order to survive. Social Environment The social environment is said to be one of the most sensitive variables to cross-influences from other variables particularly technology and the economy. The social environment tends to present challenges to an organization in the form of areas of social responsibility. Consumers are the byproducts of the society they live in and the culture/values/beliefs they adopt in this society, influences their lifestyles and behaviour. E.g.: Companys who give sponsorships are positively giving back to society. Management needs to harmonize its business operations with social responsibilities,if you have a factory, make sure no excess smoke occurs that would upset or cause the surrounding population to fall ill. Physical/Ecological Environment The ecological environment contains the limited natural resources that need to be managed with great care to limit waste. The eco environment is said to have a triple bottom line. 1. Financial Responsibility: the firm aims to make a profit. They have shareholders and stakeholders that invest their money to make the running of the business possible. 2. Social Responsibility: to ensure people surrounding the firm are better off with the operations in the environment 3. Environmental Responsibility: Managers of todays organizations are pushed to be green. Meaning that they are expected to take responsibility of the impact of their operations with regards to the environment. The ecological environment can present challenges to an organization through environmental reservation, therefore management must monitor this environment. International Environment when adding an international implication the business environment grows in complexity with more threats and opportunities. The international environment can present challenges to an organization in the form of barriers to entry and trading laws. Management needs to understand open markets, that will allow them to trade and laws governing trade. Economic Environment The economy is effected by all the other environmental variables, These cross influences constantly cause changes in the economic growth rate, causing fluctuating interest rates, and fluctuating exchange rates. Management needs to constantly keep a close check on the changes occurring in the economic environment. These economic

forces generally result in either an increase in wealth or a fall in wealth, and have certain effects on an organizations and its management. IMM : Business Management Page 2 of Tami Lee Cox Student Number : C77716________________________________________________ Question 2: 2.1 Planning forms the basis of all the tasks of management because it gives the business its definition and direction and determines the actions of management. The following are eight practical steps taken in planning

1. Identify changes that necessitate planning This is to identify any changes occurring
inside or outside of the organization, that require planning. Things such as proenvironment people push roe organizations to be more green. Encouraging them to replace there old machinery with new environmentally friendly machinery.

2. Establishing Goals After identifying the changes, goals must be formed, in order to
direct all major plans. These hierarchies of goals begin with a vision at the top, which is then converted into a mission statement. This is in turn converted into long-term goals for the organization.

3. Drawing up Premises in this step, management must agree on the planning

surmises/premises. Typically not all the members of a firms team will agree on the same premise. Top management should agree upon suitable and constant premises, as different premises can become expensive.

4. Developing Various Courses of Action this step requires the searching of and
discovering of other options that a plan can have.

5. Evaluating Various Courses of Action this involves the evaluating of alternatives in

retrospect of the goals and premises of the firm. E.g.: one option may seem perfect, but the hidden cons cause a firm to retrench many employees. Evaluating an option is a difficult thing to do, as there can be many options and the limits of these can be complex. To help this process risk analysis and preference theories can be used.

6. Selecting a Course of Action this is the deciding point, where the final decision is made
for a manger to select the option/options he/she wishes to pursue.

7. Formulating Derivative Plans once a decision is made, this does not mean that
planning is now complete. Far from it. E.g.: if a frim decides to become involved in a project, this decision causes the development of many derivative plans to come about. These derivative plans are essential to the aid of the basic plan.

8. Budgeting the final step is to change the plans into budgets. This enables managers to
see if they have enough of and the correct amount of resources to reach the organizations goals.

IMM : Business Management Page 3 of Tami Lee Cox Student Number : C77716________________________________________________ 2.2 A budget is a plan that is involve with the future distribution and utilization of different resources in light of different orginisational activities within a specific time. A budget is used to convert future plans into quantitative terms. The characteristics of budgets are as follows: - They are most frequently stated in monetary terms - They cover a specific period (usually a year) - They contain an element of management commitment - Once approved they can be changes only under previously specified options - They are periodically compare with actual performance and variances are analysed and explained Budgets are useful planning tools as not only do they provide clear guidelines about a firms resources and how they are utilized, but they also assist in performance evaluations of managers and their units. Budgets help coordinate resources and projects this is an extremely useful planning tool as it brings together the project and lays the foundations to build upon. Budgeting also exercises two measures of control: 1. It sets the limits on the amount of resources that may be used by a unit, 2. It establishes standards of performance, which will be used top measure future events. Question 3: 3.1 The mission statement is formed by the guidelines set in place by the vision statement. There are 3 questions to be asked when creating a mission statement: 1. What is/are or business/es (e.g.: what is our product)? 2. Who is our market? 3. How will we provide this service? In addition to these component the form should also address the following components: - Concern for financial stability - Philosophy Social Responsibility - Employees and all other stakeholders - Distinctive Competence. A mission statement should enforce a mutual purpose within the firm and serve as a basis of resource allocation. 3.2 Step 1: Identify Strategic Internal Factors: To help managers to decide which factors are strategic the following approaches have been noted : The evaluation of functional Segments: General Management is one of the vital factors in a firm. These factors have been listed according to potential strengths and weaknesses. Key Internal Factor Clear and realistic mission statement Organisations record Planning Systems

Organisationsl Structure Policies and Procedures Effectiveness and Utilisation of Control Systems Alignment with orginisational Culture IMM : Business Management Page 4 of Tami Lee Cox Student Number : C77716________________________________________________ Innovative Decision Making Integration with other Systems Reaction to external Changes

The Value Chain Approach: This approach is useful in assessing firms strengths and weaknesses, it is very popular in contemporary orginisations It analyses and shows how activities in a form can create customer value by : - Primary Activity - Secondary Activity The Resource-based view (RBV) of an orginisation: Orginaisation posses a hierarchy of resources. - Strategic - Base - Peripheral The Product Market Evolution:: This is used to asses the strengths and weaknesses of a firm, based on previous data. Firms use their balance sheet and income statement to analyse. The important ratios are as follows: 1. Liquidity 2. Leverage 3. Activity 4. Profitability Step 2: Evaluate Strategic Internal Factors: Managers therefore must evaluate 4 key strategic factors 1. a comparison with the orginisations performance in the past 2. a comparison with competitors 3. a comparison with industry ratios 4. benchmarking Step 3: Develop Input for the Strategic planning process: The results from step two could be applied to determine those internal factors: - give the firm that much more of an improvement over their competitors - important capabilities for the firm to have - are currently weaknesses in the firm Question 4: 4.1 Strategic Plans, Tactical Plans and Operational Plans. 4.2 Goals need to meet the following:

Specify a good goal should be specific, and should show what its related to and the period for attaining the required result Flexibility this is often only achieved at the risk of specifity. Firms forget to alter their goals when the basis on which they made their goals have changed. This results in unfair hardship on managers and employees Measurability this means that the goals must be put in terms that can easily be assesd or quantified objectively. This is to facilitate control. IMM : Business Management Page 5 of Tami Lee Cox Student Number : C77716________________________________________________ Attainability goals should provide a challenge to employees and management but should also be attainable and realistic. When goals are set at a reasonable and motivational level employees are more likely to be productive Congruency this means that the attainment of one goal must not hinder the attainment of another. Acceptability Managers will pursue goals that are inline with his/her preferences. Therefore the collaboration of managers in goal formulation is important.

IMM : Business Management Page 6 of Tami Lee Cox Student Number : C77716________________________________________________ Bibliography: Author Title Page

PJ Smit, GJ de Cronje, T Brevis, MJ Vrba 1-141 The Greater Oxford Dictionary Internet www.google.co.za

Management Principles